Correlation Between SilverCrest Metals and Chesapeake Gold

Can any of the company-specific risk be diversified away by investing in both SilverCrest Metals and Chesapeake Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SilverCrest Metals and Chesapeake Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SilverCrest Metals and Chesapeake Gold Corp, you can compare the effects of market volatilities on SilverCrest Metals and Chesapeake Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SilverCrest Metals with a short position of Chesapeake Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SilverCrest Metals and Chesapeake Gold.

Diversification Opportunities for SilverCrest Metals and Chesapeake Gold

0.36

Correlation Coefficient

SilverCrest Metals  Chesapeake Gold

Weak diversification

The 3 months correlation between SilverCrest and Chesapeake is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Chesapeake Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Gold Corp and SilverCrest Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SilverCrest Metals are associated (or correlated) with Chesapeake Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Gold Corp has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Chesapeake Gold go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Chesapeake Gold

Given the investment horizon of 90 days SilverCrest Metals is expected to under-perform the Chesapeake Gold. But the stock apears to be less risky and, when comparing its historical volatility, SilverCrest Metals is 1.54 times less risky than Chesapeake Gold. The stock trades about -0.2 of its potential returns per unit of risk. The Chesapeake Gold Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Chesapeake Gold Corp on October 8, 2024 and sell it today you would lose (1.00) from holding Chesapeake Gold Corp or give up 1.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SilverCrest Metals  vs.  Chesapeake Gold Corp

SilverCrest Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, SilverCrest Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chesapeake Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SilverCrest Metals and Chesapeake Gold

The main advantage of trading using opposite SilverCrest Metals and Chesapeake Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverCrest Metals position performs unexpectedly, Chesapeake Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chesapeake Gold will offset losses from the drop in Chesapeake Gold's long position.

The idea behind SilverCrest Metals and Chesapeake Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.